Chancellor George Osborne's austerity programme was blamed today for the "unalloyed misery" in the jobs market.

Official figures showed unemployment at a 17-year high after another 128,000 joined the jobless ranks, taking the total to 2.64 million.

Shadow work and pensions secretary Liam Byrne said Mr Osborne's decision to "clobber" the economy was now hitting families.

Employment fell by 63,000 in the quarter to October to 29.11 million, while the number of people working in the public sector dipped below six million for the first time since 2003.

The unemployment rate is now 8.3%, up 0.4% on the quarter - the highest since 1996 - while the jobless total is now worse than at any time since 1994.

Unemployment among 16- to 24-year-olds increased by 54,000 to 1.03 million, the highest since records began in 1992.

The Office for National Statistics also reported that women's unemployment increased by 45,000 to 1.1 million, the highest figure since 1988.

Opening a Labour-led debate in the Commons, Mr Byrne said: "We don't have to look too far to see the root cause of this unalloyed misery for families 11 days before Christmas."

He told MPs: "Grim news on jobs this month has followed grim news on the budget last month.

"Once again we have seen this morning how the Chancellor's decision to clobber the recovery is now clobbering families all over our countries.

"Once again we've heard of families losing their jobs because of this Government's decision to cut too far and too fast and once again we see the consequences of this Government's decision to stand easy while millions of people in our country are now standing idle."

Mr Byrne said although the Government had announced a "blizzard of initiatives", the Office for Budget Responsibility forecast rising unemployment.

He said there was one scheme which was creating jobs - the programme financed by the European Union which had achieved 75,671 job outcomes from July 2008 to October 2011.

Labour's motion called on the Government to adopt its five-point plan for job creation and growth.

Mr Byrne said the over-50s were losing their jobs at a "faster and faster pace", with the numbers unemployed for more than a year in this group rising by about 25% this year.

He said: "These are the workers who often fear that they will not get back into work again, they are the workers who often fear that they will be thrown on to some kind of silver scrapheap, and the picture that is now emerging from the country this morning is terrible."

Mr Byrne said there were more than 50 members of the Commons who now represented constituencies where the rise in long-term unemployment among the over-50s was over 50%, adding: "That is surely unacceptable and surely it demands a response from this Government."

He called on the Government to change course, learn from the figures, and provide a "real plan" for getting people back to work and creating growth.

Employment Minister Chris Grayling said the Government regarded all unemployment as bad and it remained a priority to deal with the issue, helping those affected back into work and to help create an environment where businesses were able to grow, develop and create jobs.

He said: "I have seldom in this House heard such a load of complete nonsense as I've just heard from the shadow secretary of state.

"I think we need to remember that this is the Government that brought us youth unemployment of nearly a million, that brought us unemployment of two-and-a-half million, that brought us a deep recession, that brought us the biggest peacetime financial deficit in our history and brought us a chief secretary to the Treasury who was best known not simply for his taste in cappuccino and the memos he sent to his staff, but I have to say also for the note he left behind: there is no money left."

"Today is a bad day for unemployment and a bad day for this Government's record."

Conservative David Davies (Monmouth) said: "What they don't understand is it is very easy to create a little bit of employment in the short term by borrowing money one doesn't actually have.

"But the problem is this will always lead to greater unemployment in the longer term because at some point, and they don't realise this, that money has to be paid back.

"That can only be done by raising taxes - which destroys jobs - or to cut public spending. It's a basic economic fact that Labour governments throughout history have failed to comprehend."

Labour's Kevin Barron (Rother Valley) said: "Having 2.68 million people unemployed in this country is a massive amount of human suffering that will go on and it will do for generations if it is not tackled.

"These are life chances being taken away from young people in our constituencies. I have never seen rises like this in youth unemployment since the 1980s when my constituency and neighbouring constituencies suffered from the government rundown of the coal industry."

Liberal Democrat Jenny Willott (Cardiff Central) said: "It is right today we are debating this important issue and everybody knows that unemployment is a serious problem across the whole of this country but we do seem to be having the same Opposition day debates over and over again.

"And every debate follows the same pattern - Labour don't accept responsibility for the economic mess in which we find ourselves and they are not giving new ideas on how to tackle this. They are giving the same ideas in every single debate we have.

"The Government is trying to rebalance the economy that was left to us by Labour. Labour relied on the public sector for far too long to make up for the declining growth elsewhere and they didn't support the private sector in the good times."

Scottish National Party spokeswoman Eilidh Whiteford said the Government had a "very ideological and doctrinaire" approach to cutting the public sector.

"The bottom line is that the UK as a whole is losing public sector jobs at a faster rate than the private sector can create them," she said.

"It makes no sense at all to be punishing the public sector when the private sector just can't keep up."

In Scotland, she said, the growth of private sector employment had outweighed falls in public jobs.

"The Scottish Government's decision to boost investment in the public sector and in infrastructure as far as possible has been a way of offsetting the problems of investment we have seen in other parts of the UK," she said.

Labour's Julie Hilling (Bolton West) said people in her constituency were scared of losing their jobs and not being able to afford to pay their bills.

She said: "I don't believe the honourable members on the front bench opposite get it, they don't understand the reality of worrying about losing your job, they don't understand about the fear of not being able to feed or clothe your children.

"It's not too late to change tack, for the sake of our constituents they should do so."

Tory John Glen (Salisbury) spoke about the tragedy of unemployment.

He said: "Unemployment means the loss of self esteem, it means poor mental health, it means losing the pattern of work, the discipline and the hope, and what I found very difficult to take this afternoon listening to this debate is this charge that everyone on this side of the House believes that it's a price worth paying.

"I don't believe it's a price worth paying, but I do believe it's a sad, very sad economy reality. The issue is how does Government respond."

Mr Glen added he believed the Government was "on the right trajectory to try and relieve this misery".

Labour's Sheila Gilmore (Edinburgh East) criticised the Government's policies on job creation, stating: "So that promise we were given that if we squeeze the public sector, the private sector was going to rise up and take the strain and create these jobs simply isn't happening."

Tory Alec Shelbrooke (Elmet and Rothwell) said: "We believe that we need to put in place the strong foundations for an economy which will work in the long run and will work for the future of generations beyond the generation which has been terribly let down by the previous Labour government."

Labour MP Geraint Davies (Swansea West) told MPs: "The last Labour Prime Minister will be remembered in the economic history books as the man who in 2008, alongside President Obama, averted a depression by invoking a fiscal stimulus.

"The current Prime Minister may well be remembered as the Prime Minister who stopped Europe by prematurely using his veto to (stop them putting) together a plan to provoke economic stability and growth and avert a crisis in the euro and a sovereign debt crisis across Europe.

"We all know we didn't want a financial transaction tax but that could have been dealt with at a later date."

Shadow employment minister Stephen Timms said: "The key assumption that confidence would surge has proven to be wrong.

"We will take different views about the reason why it hasn't worked but the fact it hasn't worked is beyond dispute.

"Private sector job creation has stalled. The Office for Budget Responsibility tells us 700,000 public sector jobs are going to go already over one million young people are out of work for the first time.

"One thing we can say for sure is it was folly to scrap the future jobs programme, to allow youth unemployment to rocket, a generation of young people will bear the scars of that folly through their working life.

"Those scars will be there because ministers were asleep at the wheel."

But Pensions Minister Steve Webb defended the Government's record and criticised the way Labour had presented statistics.

He said: "It is important to put on record some of the facts about the current situation. There is a danger that the tenor of the Labour Party's tone might talk down the British economy and lead to unnecessary depression of confidence at a time when we need realism and not talking down the hardworking people in our economy.

"As an example, you would hardly believe that since the general election, the number of people in work in this country has risen by 250,000.

"Let's look at the last month: in the last month, the number of people in work has risen. Risen by 38,000. Of course we can all choose different time periods, look at a quarter or a different period, but the point I'm trying to make is that the selective use of statistics like we heard at the start creates a highly misleading impression and talks down the British economy in a way that is in nobody's interest."

Mr Webb said that the claimant count had risen but in a way which was offset by policy changes meaning people had come off incapacity allowance and other benefits.

And he said the number of long term unemployed aged between 18 and 24 was "about the same" as it was in 2010 because the figures had been simplified by not taking young people on and off the statistics while on other schemes.

The Labour Opposition Day motion was defeated 233 votes to 307, a majority of 74.